APR Calculator
The fees add 2.09% to the 9.00% stated rate. Compare offers by APR and term together.
How the APR calculation works
The true APR of a business loan once up-front fees are counted, so you can compare financing offers on equal terms.
The payment is set by the stated rate
A $50,000 loan at 9% over 36 months costs $1,589.99 a month, whatever fees the lender charges.
Fees reduce the cash you get
A $1,500 fee taken from the payout leaves you $48,500, but you still repay the full $50,000 plus interest.
APR is the rate that makes the payments equal the cash received
The calculator searches for the monthly rate at which 36 payments of $1,589.99 are worth exactly $48,500 today, then multiplies it by 12. Here that is 11.09%.
Compare offers by APR and by total cost
A lower rate with high fees can cost more than a higher rate with none. The finance charge shows the total dollar cost of each offer.
Worked example. A $50,000 equipment loan at 9% for 36 months with a $1,500 origination fee taken from the payout costs $1,589.99 a month. You receive $48,500 and repay $57,239.51, a finance charge of $8,739.51 and a true APR of 11.09%.
APR FAQ
How is APR calculated?
Find the payment from the stated rate, then solve for the rate at which all payments are worth exactly the cash you receive after fees. That monthly rate × 12 is the APR. There is no closed formula, so it is found by trial, as this calculator does.
What is the difference between APR and the interest rate?
The interest rate sets your payment. APR also counts required fees, so it shows the full yearly cost of borrowing. With no fees the two are the same.
Which fees are included in APR?
Fees you must pay to get the loan, such as origination, underwriting and documentation fees. Optional costs and late fees are not included.
Does APR include compounding?
No. US APR is the monthly rate × 12, without compounding. The effective yearly cost is a little higher; use the APY calculator to convert.
Do business loans have to show an APR?
Federal Truth in Lending rules cover consumer credit, so many business lenders quote a rate, factor rate or fee instead. Some states, such as California and New York, require APR disclosure on certain commercial loans. This calculator lets you work it out yourself.
Sources: CFPB: Regulation Z (Truth in Lending), finance charge and APR · NY DFS: commercial finance disclosure rule (23 NYCRR 600) · California DFPI: commercial financing disclosure regulations (SB 1235)